The Democratic Republic of Congo (DRC) is now the most profitable market for Kenyan banks’ subsidiaries within the East African Community (EAC), overtaking Rwanda in 2023.
According to latest data from the Central Bank of Kenya (CBK), DRC contributed to the highest earning capacity recording KSh 30 billion in profit before tax, translating to 45.5 percent of the total profits. The regional subsidiaries’ profit before tax doubled to stand at KSh 66.1 billion in 2023, a 103.4% increase from KSh 32.5 billion reported in 2022.The country boasts important minerals including cobalt, copper and coltan used in electric vehicle batteries production.With the high global commodity prices of these raw materials and the aggressive demand for electric vehicles, DRC presents a great market opportunity in the banking sector.
Equity Bank entered the market by acquiring a 67% stake in Banque Commerciale du Congo in 2020. KCB Group also entered the market via an acquisition, this time of Trust Merchant Bank. This expansion into the country was further boosted when Kinshasa formally joined the EAC in 2022.
The regional expansion has been lucrative for Kenyan lenders, which now have a combined deposit base of KShs. 1.8 trillion, from Ksh 1.3 trillion in 2022, in their subsidiaries outside their home market. In 2023, for example, 51% of Equity’s deposits streamed in from subsidiaries in DRC, Rwanda and Tanzania. Equity Group Plc’s subsidiary in DRC, Banque Commerciale Du Congo -BCDC had total deposits of KSh 504 billion, 28 per cent of the total deposits of subsidiaries across all banks.
KCB Group Plc’s subsidiary in DRC, Trust Merchant Bank has total deposits of KSh 251 billion, accounting for 14 per cent of the total deposits.
Profits and LoansIn total, subsidiaries in Rwanda and Uganda contributed 20.9 percent and 13.5 percent of the total profits respectively while subsidiaries in Tanzania contributed 8.5 percent.
South Sudan, Mauritius and Burundi were the least profitable and contributed 6.7 percent, 3.4 percent and 1.6 percent of the total profits respectively.Notably, one subsidiary operating in Uganda reported a loss of KSh 25.4 million. The combined gross loans for the subsidiaries in the host countries stood at KSh 1.1 trillion as at December 31, 2023, a 52.2 percent uptick from KSh 725.8 billion in 2022.Subsidiaries in DRC recorded the highest level of gross loans at KSh 402 billion accounting for 36.4 percent of gross loans in all the subsidiaries outside Kenya.
Tanzania accounted for 18.6 percent of the gross loans with Rwanda and Uganda accounting for 17.4 percent and 16.1 percent of the gross loans respectively. Mauritius recorded gross loans of Ksh 102 billion accounting for 9.3 percent of gross loans.
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